Most of what you've read online about IRS problems is wrong, or at least misleading. I'm Darrin Mish. I practice tax law in Tampa and I've been doing this for 32 years. Here's what's actually true.
Last year, the IRS audited about 1.1 million tax returns from those earning under $200,000 a year and some 34,000 returns of those earning above $1 million per year. According to IRS Commissioner John Koskinen, this year the IRS will audit fewer returns because there are fewer auditors due to the budget cuts imposed on the agency. Nevertheless, you can make sure you are not one of those who gets audited by avoiding certain common mistakes on your return. Click here to read or watch more IRS Help resources.
One common but avoidable mistake is the inaccurate recording of income in your 1099 like wrongly writing $2,500 when it should have been $5,200. Another common mistake is carelessly omitting your income in the income field. Needless to say, it pays to check and re-check the information you put into your 1099 before submitting it.
You can be free from worrying over a possible audit if you keep regular and up-to-date records of all your expenses and income. If you cannot substantiate an expense with an official receipt, you should not include the expense into your tax returns as a deduction against your taxes. This is especially crucial if you are making claims for a refundable credit or seeking deductions for expenses from your home business. These are the things the IRS keeps an especially keen eye out for.
So be sure to keep accurate records of all your spending, and bear in mind that the IRS may take three years to send you an audit notice.
If you have kept good records and submitted an accurate return and yet receive an audit notice over the mail, don’t panic. You have the option of either sending a check to pay what the IRS says you owe or respond to the notice if you feel the audit is in error. After all, the IRS too may make mistakes. If you do want to challenge the audit notice to make sure you respond early. Do not procrastinate in providing evidence to the contrary of the audit notice. The longer you delay the more interest charge accumulates on the amount in the audit notice.
Finally, do keep your tax enrolled agent or tax attorney informed of the audit notice. It is their job to advise you on what to do. If you wish to consider engaging us to represent you in any tax matter, call us at (813) 229-7100 for a free consultation.